Ukraine is going to receive USD 300 m from Japan to boost reforms and its financial sector

12/4/15

Today, minister of finance of Ukraine Nathalie Jaresko and Vice-President of the Japanese Agency for International Development JICA Kenici Tomiyoshi have signed a loan agreement amounting USD 300 m. The signing ceremony was also attended by prime minister Arseniy Jazenyuk and Ambassador of Japan in Ukraine Shigeki Sumi.

The loan is provided to improve the effectiveness and transparency of the public sector, to boost deregulation as well as to improve the business climate and to support the financial system of Ukraine in general.

The loan is being provided under the cooperation program of Ukraine and the World Bank as a part of the «Second loan for development policy» (DPL-II) which was approved in the autumn of 2015.

The loan from Japan became possible, because Ukraine fulfilled all terms under DPL-II and implemented a number of structural reforms to recover the financial sector as well as to enhance legal and institutional capacities for the proper operation of the banking system.

As a part of the efforts mentioned above, the Council for financial stability was created in Ukraine, the Parliament adopted the Law on the Deposit Fund for citizens significantly enhancing the protection of citizens’ savings, a thorough examination of the banking sector was carried out resulting in recapitalizing viable banks and removing insolvent ones from the market and thus in the overall improvement of the Ukrainian banking system, decisions were taken to strengthen control and liability of parties related to banks which is supposed to prevent abuse of legislation and to restore confidence of the citizens in the banking system.

«The very fact of signing this Agreement is a proof that Ukraine is really making progress in its reforms, and we are grateful to our Japanese partners for their
support of this process» Nathalie Jaresko said during the signing ceremony.

JICA is the authorized institution of the Government of Japan. Japan is providing bilateral support to Ukraine including loans under preferential terms and free-of-charge aid (grants and technical cooperation).

Cooperation with Japan:

In June 2015 Ukraine signed a loan agreement with JICA amounting USD 1.1 b to finance the modernization of the sewage facility in Bortnychi to improve the sewage water processing in Kyiv and thus to improve the life quality of citizens.

The above agreement on the modernization of the sewage facility is only a part of the Japanese financial support to Ukraine amounting USD 1.5 b in total. Starting from the Revolution of Dignity Japan has always supported Ukraine. In 2014 Japan announced USD 100 m of budgetary support to Ukraine which was increased by
further USD 300 m in 2015 within the joint project with the World Bank «Loan for development policy».

Key facts on the loan:

• maturity term – 20 years with a 6-year grace period;

• interest rate – under 1%;

• payments are effected twice a year.

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